Comment on “The long and variable lags of monetary policy: Evidence from disaggregated price indices” by S. Borağan Aruoba and Thomas Drechsel

The vast majority of the literature on the effects of monetary policy shocks has considered their impacts on aggregate variables, including aggregate prices. The paper by Borağan Aruoba and Thomas Drechsel studies the impacts of monetary policy on the components of PCE. It documents considerable variability in the impulse response functions across components and finds that monetary policy shocks have large but very delayed effects on price aggregates. The finding of cross-sectional variability and its implications are very convincing, The large but delayed effects on aggregates may be more dependent on methodology and shock identification. • ADs finding of cross-sectional variability in impulse responses is very convincing. • Controls matter a lot in these local projection regressions. • Large but delayed effects on price aggregates depend on specific shocks considered.